What is level matching and why is it important in home theater?
Level Matching, just as the name implies, is setting the gain of each speaker to reproduce sound at the same volume, matching all speakers to one another.  Level matching is important because your brain is programmed to recognize noises that stand out from the ordinary, shifting our concentration and acting as a distraction.
 
If your cell phone rings at a cocktail party, it will not capture much attention because the volume matches that of the environment.  But if your cell phone rings at a piano recital, people are going to notice, and their attention will shift, simply because it's louder than the other sources.  The same is true in home theater.  When all of the speakers are not playing at the same level, your concentration is naturally drawn to those that sound louder, causing interference and distracting you from the details that bring a movie to life!